The organic vegetable box company Riverford is to become 100% owned by its staff after its founder, Guy Singh-Watson, agreed to sell his remaining 23% stake for almost £10m.
Singh-Watson, who sold nearly three-quarters of the company to employees in 2018, will take a £9.8m payment over five years and immediately hand full control to a trust on behalf of its 900 staff who each receive an annual profit share and participate in the running of the business.
The 63-year-old farmer said the deal, which will take the total paid for his shares in the business to £14m since 2018, did not mark his retirement and that he would continue to be involved in the business as a trustee, non-executive director and spokesperson for the business.
“Founders find negotiating this transition to their successors incredibly difficult and painful and most people make a bit of a mess of it,” Singh-Watson said. “Founders can hang around too long, and I don’t want to be that person who needs to be told to go.”
He added: “When the business became employee-owned in 2018, I wanted to ensure that the move was a successful one, and that the values of the business were safeguarded by its new owners and governance arrangements.
“Since then, it’s been a privilege to witness the business grow in ways we couldn’t have predicted, all while remaining committed to its founding purpose: to balance the needs of customers, suppliers, the environment, and wider society, and provide fair and rewarding employment to our staff.”
Singh-Watson said a proportion of the cash he was receiving would be invested in more solar power and agroforestry on his own farms – in Devon and France – with some going to the Ripple Effect charity, which helps farmers overseas, and local community projects in Devon.
The sailing and surfing fan said he also planned to spend a bit of his pay-out on himself, but was “not remotely interested in fancy cars or boats”.
“After much consideration and despite the example set by many politicians … I have decided to make no attempts to avoid tax liability on the sale of the shares,” he said.
“I’ve not set up trusts to avoid tax, even though much of the money will end up supporting charitable projects. I will pay my tax as others who can’t afford creative accountants do, and I strongly support the idea of a wealth tax.”
Singh-Watson said the shift to employee ownership had been influenced by the John Lewis Partnership, the owner of the Waitrose supermarket chain, which his farm once supplied. He expressed dismay that the larger company had been reportedly considering selling a stake to investors in order to raise cash.
“I suspect that would be the beginning of the end,” he said, urging John Lewis to stick with employee ownership and downsize rather than borrow large sums.
Riverford’s employee ownership deal comes after a tricky few years for the veg box company. Although it enjoyed a boom in orders during the pandemic lockdowns, many customers have since returned to shopping in supermarkets and local stores.
Sales slid 12% to £97m and profits, before tax and payment of a profit share to staff, shrank to £3m in the year to the end of last month, from £6.2m a year before amid increases in the cost of produce, labour, distribution and energy.
However, the group now delivers 65,000 boxes a week compared with 50,000 when it made the first move to employee ownership, while sales have risen by more than 50% in that time.
“Riverford is a powerful example of the potential that can be unlocked through employee ownership,” said James de le Vingne, chief executive of the Employee Ownership Association.
Rob Haward, the managing director of Riverford, said staff ownership protected the group’s “values and purpose” in a way that a sale to new owners who might have “quite different motives” might not.
“Not being beholden to a small group of shareholders who want a quick return enables us to think long term,” he said, adding that the arrangement “makes for a leaner and more motivated business and the structure helps decision-making”.
He said trading had stabilised after the pandemic boom and subsequent retreat and there was now room for growth as concern about “protection of the planet and fair treatment of farmers is coming back into the consciousness of consumers”.
However, the group was forced to put up the price of its vegetable boxes by about 5% in October, and Haward said it was likely to have to consider a similar price rise this summer as the cost of producing vegetables had soared.